As an economist, I’m exceedingly fond of writing about what I know. And at the risk of coming off as immodest, I know quite a bit about the construction industry’s present situation. Borrowing costs are too high. Materials prices are rising. The data center segment is hotter than the surface of the sun. Certain job openings remain far too difficult to fill, especially in a variety of skilled occupations.
“What I don’t know” is a subject I find altogether less appealing, but alas, it’s just as—if not more—telling about the state of the industry. And at the present moment, there’s one economic subject that stands alone in terms of just how much I don’t know—the future of interest rates.
Where are interest rates headed?
The future path of interest rates is shrouded in mystery, and I’m not alone in holding that opinion.
The Federal Reserve has cut the target range of the Federal Funds Rate by the equivalent of seven 25-basis point decreases since it began loosening monetary policy in the middle of 2024. The most recent of those cuts, which has done little to lower borrowing costs, came at the Fed’s December 2025 meeting, and the Fed held rates steady at its first three meetings of 2026.
The Fed didn’t lower rates at its June meeting either, and that wait-and-see approach should hold through the ensuing few meetings as well.
